German daily Sueddeutsche Zeitung reported that a group of finance ministers from the core EU countries – Germany, France, Italy, Spain and the Netherlands – plan to meet in Berlin on Friday with IMF officials for talks on Greece’s debt crisis, ahead of a euro zone ministers’ meeting on Dec. 5. On the agenda there will be a discussion of short-term debt relief for Greece. Greece will not be represented in the talks.
The public position of the Greek government is that it cannot compromise on labour reforms or adopt new austerity measures.
However, red lines have been crossed several times in the past when the EU institutions exert pressure on Greece, so a compromise is very likely in return for some watered down version of debt relief that the Greek government desperately needs.
A significant political decision is going to be taken by the IMF that needs to label the Greek debt as sustainable before participating in the current bailout, which is one of Germany’s requirements.
IMF participation will inevitably require additional austerity measures to be taken by Greece, as an alternative to the EU accepting lower primary surplus targets. The IMF considers that EU targets are unobtainable at the present level of government spending and that EU projections for Greek growth are over optimistic.
There has just been enough agreement between the creditors so far to allow the government to submit its budget draft to parliament on Tuesday. It aims for a primary surplus of 2.0 percent of economic output in 2017.
